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I am sorry to refer again to the McKinsey analysis, but I do so because what industry says is likely to have consequences. According to the report, far from the early years yielding low-hanging fruits, up to 2020 the price of carbon could reach 60 to 90 euros per tonne

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carbon equivalent. However, by 2030 it could fall to 40 euros. In other words, depending on how fast we try to go, the period to 2020 could be the tougher rather than the easier one, depending on what we are trying to achieve. So if you are trying to achieve 26 per cent as one target and 40 per cent as another, that is backed up sector by sector by the kind of policies required. I am sure the Liberal Democrats will be delighted to know that if they are going to achieve a 40 per cent target, they will have to build at least one nuclear power station a year for several years.

When the figures are converted into actual policies, which somebody has to do, being firm on a figure of 40 per cent and telling the Committee on Climate Change to get on with it—and that any recommendation has to go before Parliament because the Government cannot say yea or nay—does not make sense. If the Liberal Democrats are anywhere close to power—they might be in a coalition government, but heaven forbid if they were—they would have something to say about it. They would soon find out whether judicial reviews and binding commitments hold water.

My general point is this. A range is not a silly idea for an intermediate position. It provides flexibility and manoeuvrability depending on the circumstances, and it is achievable. It is not the same thing as specifying what is to be achieved 40 or 45 years hence.

Lord Rooker: We have had a useful debate. I am not seeking to cut corners, but in the interests of making a little more progress before we finish, I shall give a brief response and hope that the implications will be clear. We have already discussed the fact that the Committee on Climate Change will review the 2050 target to see whether it needs to be tightened. That is a firm commitment. As part of the review, the Committee on Climate Change will also need to consider the implications for the 2020 target—you cannot do one without the other. The brief, as I said to the noble Lord, Lord Crickhowell, is probably the same and prepared by the same person as prepared David Miliband’s briefs—one has to be serious about continuity in Government here.

Amendment No. 35 sets the upper limit on the 2020 target. It is designed to provide greater short-term certainty to business and should help to facilitate investment decisions necessary for paving the way to a low-carbon economy. We have conducted little analysis to date on the impact on the economy of reducing emissions beyond the 32 per cent, as that was felt already to be a challenging level. It is important that the analysis is carried out before any change is considered. That said, the Bill does not rule out reducing emissions by more than 32 per cent in 2020. That said also, I am prepared to take Amendment No. 35 away and to give it further consideration.

Lord Teverson: I thank the Minister for his response, but I will just come back on a couple of things. On the points of the noble Lord, Lord Woolmer, we should not forget what I should have said earlier but am sure all noble Lords are well aware of, that the 40 per cent

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reduction is on 1990 levels. As a nation, we have already achieved some 12 per cent—in terms of carbon dioxide, I think—although we know that since 1997 it has fairly flatlined. Those targets are rather difficult, because we are talking about figures relating to a baseline some 17 years ago—a bit like the rates or the council tax, which we never get around to rebasing. However, that is how it is internationally and that is how it should be in the Bill. Forty per cent is, I agree, a big target, but it is not as big as it seems for the first period.

On the low-hanging fruit argument, as I said myself, there are arguments both ways. The huge potential from the unexciting and unsexy area of energy saving is well accepted—particularly in the domestic sector, let alone from energy saving in industry. That is a whole area where, with the right government policies and—let us not forget—public and personal motivation, we could achieve much. Having said that, I agree that there is more sense in the medium-term target going back to the climate change committee—more perhaps than the final one, although we have all accepted around the Chamber that the final target, at 60 per cent, is wrong. We are not absolutely saying that it is wrong, but we all believe that it is wrong. Therefore, what I am saying is that, if you have a mid-term target in the Bill, then it is going to have to be something of the 40 per cent order. That is a fact in order to meet the types of target that are going to be set for us—through Government, but suggested by the climate change committee. I misunderstand the Bill the way that I read it at the moment. To me, the statutory targets have to be between those two numbers—that is how it reads. If I read that wrong, then fair enough. Even then, it certainly needs amendments to point out that that is a target range above the statutory figure or however we move forward. That, to me, is not clear in the Bill at all—in fact, to me it seems clear the other way around.

I thank the Minister for his reply. I think that the approach is starting to move in the right way. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 35 not moved.]

Earl Cathcart moved Amendment No. 36:

“( ) for the budgetary periods including the years 2015, 2020, 2030 and 2040, must be such that the annual equivalent of the carbon budget for the period is lower than the 1990 baseline by at least any percentage that may be recommended by the Committee on Climate Change and approved by a resolution of both Houses of Parliament;”

The noble Earl said: The amendment is directed at the part of the Bill relating to interim carbon budgets. It is part of our general strategy to ensure that it is the committee’s recommendation, approved by Parliament, that is setting the targets. The amendment seeks to further the committee’s role in target setting by placing the responsibility of setting the general framework and progress within the committee.

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The process of setting targets for carbon reductions requires a dual approach, focusing on both the short and the long term. The annual rolling targets and the yearly milestones are essential for monitoring the short-term progress, yet these are created with an eye on meeting the interim targets which are to be the scaffolding on which our progress hangs. It is thus very important that the long-term outline for fighting climate change comes from the committee. Any changes to the interim target should come from the scientists on the committee and be subject to parliamentary approval.

These targets are important. It is likely that meeting the interim targets will be the most public indication of a Government’s success or failure in tackling climate change. Thus it is essential that they are realistic and authoritative. Having the committee set them achieves this result. It is essential to provide a genuinely independent yardstick by which we can measure the effectiveness of government action. Thus the amendment ensures that the interim targets are set in a way that squarely removes politics.

My noble friend Lord Brooke of Sutton Mandeville noted on the first day in Committee that he had the accidental fortune of taking credit for the miracle that the British Library opened in 1998. I agree with him that it is difficult for a Secretary of State at any particular moment to be charged with a responsibility that spans 20 or 40 years. However, if these interim targets are set independently and publicly and are tethered to the short-term milestones, it might go some way to having a mechanism to ensure that the long-term targets have real meaning and we will be able to assess a particular Secretary of State’s performance. This must be done in conjunction with reports that not only list the status of carbon counts but also provide an assessment of the measures that have been implemented to reduce emissions. We have tabled amendments to this effect. I beg to move.

Lord Puttnam: I support the amendment and use it as a cover for raising an issue that has been worrying me for the past couple of hours. I am very concerned that the sense of urgency is beginning to seep out of our debate. The word has not been used in Committee today but it remains very important. We have been watched from the Gallery by a number of young people; this is their Bill, not ours. Unless we address the issues we are here to discuss with a greater sense of urgency and with the constant sense that there is a clock ticking, we shall not do the Bill justice.

I have two observations. At the weekend, I was watching World Service Television in Paris and a professor from the Cato Institute in the United States, which is a right-of-centre think tank, was being interviewed. He said in response to what was happening in Bali that any steps taken by any developed country which worked against the interests of industry and business could only damage the prospects of climate change reduction because they would just get in the way of business sorting the whole thing out. That is a rather extreme view and I do not for one moment agree with it.

I also read recently a very good book on aircraft production in Britain in the early years of the war and how, for a long time, it was left to industry to get on

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with it. It was eventually realised that this was not working and that we were likely to lose the war unless a more determinist position was taken, and a very significantly accelerated process of aircraft production was imposed on the aircraft industry.

We need to strike a balance between assuming that, somehow or other, industry and business will sort this out for us, and the need to understand that the clock is ticking, and to make absolutely clear that the Government have the machinery to impose solutions where and when they are not forthcoming. That need has been a broad underpinning of almost everything we have discussed today. As anyone who reads our report will know, I bow to no one in enthusiastically supporting the formation of the climate committee and its powers and role in formulating policy. But it would be a dereliction of duty if we leave everything to the climate committee without a very clear mandate and timetable, and a sense of the urgency in getting this right. That is not, I am afraid, coming through in Committee today.

9.45 pm

Baroness Morgan of Drefelin: I hope to change that sense of a lack of urgency. When I listen to this debate, I think about how old I might be in 2050; I look forward to being 89. I also remind myself that my daughter will be 58 and I hope very much to have some grandchildren, who will be, perhaps, in their thirties. When we start to think about climate change and how we are going to make really quite radical changes to our behaviour, the way we do business and conduct government, we need to inject a sense of urgency and remember that we are talking about the future of our children and grandchildren. I thank the noble Lord for reminding us of the need to inject a bit of urgency into our deliberations.

The noble Lord highlighted that the Government, civil society and industry need the mechanisms and machinery in place to deliver the results that we all want to see. I know from experience of being in Committee that once you get into the detail, it can start to grind slowly. Noble Lords around the House will, I am sure, agree that the weight of responsibility on us to get the machinery and mechanisms right is absolutely self-evident.

When the noble Earl, Lord Cathcart, talked about the kind of scaffolding that he was looking for within the Bill, he painted a picture around these interim targets. We on the Government Benches are talking about scaffolding that is much more based on budgets and budget-setting, advised by the climate change committee, and annual reporting and accountability to Parliament. I am not sure that we are all looking at things from such a different perspective, but we are getting ground into the detail.

The noble Lord will not be surprised to hear that we do not consider that Amendment No. 36 would add anything to the framework already provided in the Bill. The kind of scaffolding he is talking about is there already. In fact, it could undermine a key part of the Bill; that is, the idea of flexible five-year carbon budgeting to take us to 2050. That is the principle

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underpinning the Bill. There are clear reasons for including an interim target for 2020, which we have all just discussed.

The noble Lord, Lord Crickhowell, who is not in his place just now, reminded us of the importance that the Joint Committee placed on this. Although he made points about the range, the committee particularly welcomed the importance to business represented by the 2020 target. However, to set further interim targets would restrict the flexibility which my noble friend Lord Rooker has highlighted time and again as being of key importance within this Bill. The five-year carbon budget framework provides us with important flexibility.

Setting further interim targets at this stage would effectively dictate the trajectory to 2050 from the start. It is important that the committee is able to advise on the appropriate trajectory to 2050, based on the best information available at the time. This would enable the committee to take account of any future developments—for instance, in climate science, understanding the economics of climate change or the development of new, low-carbon technology.

There is little point in setting the trajectory in statute now, as there are too many uncertainties. The trajectory would probably need to be revised significantly as we progressed towards the 2050 target. As has already been discussed in the context of amendments which called for annual targets and rolling annual targets, it is unclear how such mechanisms would interact. The intention to achieve increased long-term certainty would be undermined by these different mechanisms in the Bill. My noble friend Lord Rooker made commitments to consider quite a number of matters between now and Report, not least how we can strengthen the annual reporting processes to Parliament, which go some way to reassuring noble Lords opposite that we take seriously concerns about transparency and accountability.

The amendment refers to a 2020 target. As we have made clear—my noble friend just highlighted it—the review of the 2050 target by the Committee on Climate Change will also consider the impact on the 2020 target. We are already committed to considering whether the review should be put in statute, as my noble friend has just reminded the Committee.

My noble friend said that there is a great need for urgency. That is why the Government have brought forward, and hope to take a lead with, this groundbreaking Bill. With those comments, I hope that the noble Earl will consider withdrawing his amendments.

Earl Cathcart: I am not totally happy with the Minister’s response. We have consistently tried to strengthen the role of the committee. If it is able to do what the amendment prescribes, it, too, can be inflexible. It would be good if the Minister reconsidered the amendment. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 37 not moved.]

The Duke of Montrose moved Amendment No. 38:

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The noble Duke said: We had an interesting debate on an earlier occasion when the noble Lord, Lord Teverson, tried to tempt us with the thought of changing away from five years. As far as I could see, the Government were not convinced, and I am not sure that the rest of the Committee was. The amendment would simply tidy up the language of the Bill and make it more precise. The Bill already stipulates that the number of years for a carbon budget period will be five. We see no reason why that cannot be reflected here. The amendment would simplify the language for what the “annual equivalent” means; that is, the carbon budget divided by five. I hope that it will find favour with the Minister. I beg to move.

Baroness Morgan of Drefelin: I thank the noble Duke for raising the amendment. I thought that he was thinking about tidying up the drafting for us.

Amendment No. 38 would change the definition of an “annual equivalent” of a budget, so that it was always the total of the budget divided by five. As we know, the system of five-year budget periods in the Bill mirrors the length of current commitment periods under the Kyoto protocol and the EU Emissions Trading Scheme, as has been discussed in Committee. However, binding targets under the Kyoto protocol currently only extend to 2012, and it cannot be taken for granted that any future international agreement that sets targets would run on a five-year cycle. In fact, we touched on that at close of play in our previous sitting. Clause 18, therefore, allows the Secretary of State, subject to parliamentary approval through the affirmative resolution procedure, to amend the length of a carbon budget. That power can be exercised only if it appears necessary to keep the budgetary periods in line with similar periods under any agreement at European or international level. Before doing so, the Secretary of State must consult the devolved Administrations.

Clause 18, therefore, ensures the timeframe of budgets in the Bill keeps step with future developments in the international context. However, the amendment changes the definition of “annual equivalent” within the budget, so that it is equal to the amount of the carbon budget for the period divided by five. I can understand why the noble Duke has moved the amendment but, given the points that I have made about the international context, he might consider withdrawing it.

The Duke of Montrose: I am grateful to the noble Baroness for the way in which she summed up the Government’s position. Of course, when she starts talking about consulting devolved Administrations, all sorts of complications are likely to arise. I would like to reflect on what she has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Lord Rooker: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

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